PAVGA
photo-1457369804613-52c61a468e7d.jpg

News

PAVGA News, Announcements & Industry Updates

 

PAVGA is making progress – and headlines – and we continue to advocate for the legalization of video gaming terminals in Pennsylvania. Please check back often as we continue to add announcements and news stories to this growing list.

 
 
Pennsylvania House joins Senate in expanding gambling

Source: www.mcall.com

From the Bible to mythology to popular culture, the number 13 has been associated with treachery, betrayal or plain old bad luck.

But none of those superstitions held sway Thursday over the Pennsylvania Legislature as it approved a massive overhaul of a 13-year-old gambling law that legalized casino wagering and led to newfound state and local revenues.

The House voted 109-72 to approve one of the nation's largest expansions of gambling options despite lawsuit threats and concern the changes will hurt the state’s dozen casinos. It’s become a $3 billion industry since slot machines started in 2004 and table games began shortly thereafter.

House Bill 271 would create 10 mini-casinos and allow some truck stops to operate video gaming terminals, also known as VGTs, and let airport passengers gamble on tablets. It would legalize fantasy sports and online gambling from any computer, phone or tablet in the state. It would permit the state lottery to sell tickets online. It would legalize sports betting if Congress OKs them nationally.

The bill also would restore a share tax casinos had paid to municipalities with gambling houses and nearby communities. Last year, the state Supreme Court shot down the “local share” fee as unconstitutional after Mount Airy Casino Resort sued, endangering a combined $142 million that propped up municipal budgets of Bethlehem, Allentown and other places.

As a fix, the bill requires more successful casinos, including Sands Casino Resort Bethlehem, to pay an extra tax to aid the finances of Mount Airy and other less-successful casinos.

The bill, approved Wednesday night by the Senate, awaits Gov. Tom Wolf’s approval or veto. And he was mum on Thursday, but industry experts were talking.

“Aside from any state initially authorizing casino gambling, this is one of the most aggressive gambling expansion bills we’ve ever seen,” said Joseph S. Weinert, senior vice president of Spectrum Gaming Group, a nonpartisan consulting firm in Linwood, N.J.

This year lawmakers adopted a $32 billion budget without fully spelling out how to pay for it. The gambling measure helps fill a resulting $2.2 billion deficit. The bill is estimated to generate nearly $234 million in application fees and license fees in 2017-18.

But lawsuits could be on the horizon, jeopardizing various parts of the measure.

Hollywood Casino at Penn National Race Course, near Harrisburg, has threatened to sue over the mini-casino provision, which says a mini-casino cannot open within a 25-mile radius of an existing state casino.

Hollywood officials have argued buffer zones around casinos clustered in the eastern and western parts of the state would combine to make a larger zone than the one around Hollywood, which stands apart.

“This discrimination against Hollywood is not just bad economics and bad policy, it is against the law,” Hollywood Vice President Carl Sottosanti wrote in a letter to lawmakers.

A successful lawsuit on any claim would not derail the bill.

The bill, years in the making, almost didn’t happen. A majority of House Republicans wanted VGTs in thousands of bars, restaurants and other places, including some nursing homes with liquor licenses. Sands’ parent company, Las Vegas Sands Corp., funded an anti-VGT campaign that topped $1 million in television ads.

Hollywood Casino’s parent company, Penn National Gaming, was the state’s only casino that favored the House’s full VGT menu. Penn National operates a video slot subsidiary in Illinois.

Officials with Sands and Mount Airy casinos did not return calls seeking comment.

State Sen. Pat Browne, R-Lehigh, a key budget and gambling negotiator as chairman of the Senate Appropriations Committee, said the Senate tried to mitigate the legal risk and protect existing casinos.

The Senate limited VGTs to truck stops and allowed counties with existing casinos to ban truck-stop VGTs. In addition, he said, existing casinos have the right of first refusal to operate minisites. Those compromises, Browne added, were necessary to ensure the budget was balanced and restore the local share tax, which he called the most important piece of the bill for the Lehigh Valley.

State Rep. Bob Freeman, D-Northampton, said that while he has misgivings about VGTs and online gambling, ending the budget impasse and restoring the local share fee were more important.

The state’s total gambling revenue for the 2016-17 fiscal year amounted to $3.2 billion, trailing the previous fiscal year by $25 million due to a drop in slot machine revenue nearly offset by growth at the tables.

While the state’s slot machine revenue has flattened out or declined since hitting about $2.48 billion in 2011-12, table games revenue has increased for seven consecutive years, generating almost $867 million last year. Sands has maintained its title as Pennsylvania’s table games king.

Companies that have advocated for the state to legalize online gambling predicted the bill would generate more revenue.

“This is commonsense legislation that will protect consumers, help close Pennsylvania’s budget gap and make the state more competitive within the regional gaming industry,” said Eric Hollreiser, spokesman for Stars Group, the parent company of PokerStars, an online game that operates in New Jersey.

The bill may not generate the revenue lawmakers hope, said Roger Gros, publisher of Global Gaming Business Magazine and president of Casino Connection International in Las Vegas.

It’s a myth, he said, that online gaming operations do not come with large operational costs. Studies show casinos can only make money on online gaming if the tax rate is 20 percent or below. Pennsylvania’s 54-percent tax rate will be cost-prohibitive for casinos to get into the internet slots market, and online poker is too small a piece of the market to make up the difference, Gros said.

Additionally, Weinert said, it’s a matter of time before VGTs spread to bars and restaurants, cutting into casinos’ bottom line as has occurred in Illinois.

“Once gambling is introduced,” he said, “it doesn’t recede. It only expands.”

PAVGA